HKMA Urges Banks To Scrutinise 'High Risk' Customers

by Mary Swire, for LawAndTax-News.com, Hong Kong

10 June 2004

The Hong Kong Monetary Authority (HKMA) on Tuesday issued a supplement to the territory's anti-money laundering guidelines.

The supplement sets out the latest "Know-Your-Customer" principles, taking account of the requirements of the paper on "Customer Due Diligence for Banks" issued by the Basel Committee on Banking Supervision in October 2001 and the revised Forty Recommendations issued by the Financial Action Task Force on Money Laundering in June 2003.

Under the new guidelines, banks and financial service providers are urged to subject the transactions of higher risk customers to enhanced due diligence.

Those deemed by the HKMA to fall into the high risk category include politically exposed persons, correspondent banks from "non-cooperative jurisdictions", and offshore companies established in order to disguise beneficial ownership.

Speaking to the South China Morning Post following the publication of the supplement, executive director of banking policy at the HKMA, Simon Topping observed that:

"Hong Kong has been successful in establishing itself as an international financial centre by being known as a place which has strong control, good regulation, good supervision and being clean. If some businesses get turned away because things are slightly dodgy, then so be it. We only want good businesses here."

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